MEG ENERGY ENTERS INTO AGREEMENT TO BE ACQUIRED BY CENOVUS

Value certainty. Upside participation. Unanimously approved by MEG board.

MEG Energy Enters into Agreement to be Acquired by Cenovus

MEG Energy Corp. (TSX: MEG) ( “MEG”, or the “Company”) today announced that it has entered into an arrangement agreement (the “Arrangement Agreement”) with Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) (“Cenovus”) under which Cenovus will acquire all issued and outstanding common shares of MEG (“MEG Shares”) in a transaction that values MEG at $27.25 per MEG Share, (the “Purchase Price”). 

The proposed transaction (the “Transaction”) to be completed by way of a plan of arrangement under the Business Corporations Act (Alberta) represents a MEG enterprise value of $7.9 billion, inclusive of assumption of MEG’s debt, and is expected to close early in the fourth quarter of 2025, subject to customary approvals. 

Under the terms of the Transaction, each holder of MEG Shares (a “MEG Shareholder”) will have the option to elect to receive for each MEG Share:  

  1. $27.25 in cash per MEG Share; or 
  2. 1.325 Cenovus common shares (each whole share, a “Cenovus Share”) per MEG Share; or  
  3. a combination thereof, subject to pro-ration based on a maximum amount of cash and Cenovus shares set out in the Arrangement Agreement.  


On a fully pro-rated basis, consideration per MEG Share represents approximately $20.44 in cash and 0.33125 of a Cenovus common share. The value of consideration payable under the Arrangement Agreement represents a mix of 75% cash and 25% Cenovus Shares. The Transaction is fully financed by Cenovus and is not subject to any financing conditions.
 

Strategic Review

On June 16, 2025, MEG initiated a strategic review of alternatives (the “Process”) which sought to surface an offer superior to the Company’s compelling standalone plan. The Process was approved by the MEG Board which authorized a special committee comprised of independent members of the MEG Board (the “Special Committee”) to oversee the Process. 

After evaluating several alternatives, including continuing with MEG’s previously announced standalone development plan, a comprehensive review of the unsolicited offer (“Unsolicited Strathcona Offer”) from Strathcona Resources Ltd. (“Strathcona”), and proposals received in the Process, the MEG Board has determined that the Transaction is in the best interests of MEG and its stakeholders. 

Benefits of the Transaction for MEG shareholders

  • Significant Premium: The Purchase Price represents a 33% premium to MEG’s unaffected 20-day volume-weighted average share price on May 15, 2025, the last trading day preceding the first public announcement of Strathcona’s intention to acquire MEG. The Transaction is valued at approximately $7.9 billion, including the assumption of MEG’s debt. 
  • Certainty of Consideration: The consideration mix offers a high degree of value certainty, with 75% in the form of cash and 25% in the form of highly liquid Cenovus Shares which will be freely tradeable immediately upon closing of the Transaction. 
  • Upside Participation with Significant Synergies: The Transaction provides MEG Shareholders continued ownership in Cenovus, an industry-leading producer with significant scale and growth potential, which expects to realize approximately $150 million of near-term annual synergies, growing to over $400 million per year in 2028 and beyond through corporate, commercial, operational and development synergies. 
  • Accelerates and De-Risks MEG’s Standalone Value: The Transaction brings forward substantial value from MEG’s standalone plan, including the expansion project at Christina Lake growing production capacity to 135,000 bpd (the “Facility Expansion Project”), which will continue to advance. 
  • Superior to the Unsolicited Strathcona Offer: The Unsolicited Strathcona Offer involves consideration, per MEG Share, of $4.10 in cash and 0.62 of a Strathcona share. The share component of the Unsolicited Strathcona Offer represents approximately 85% of the total consideration and would expose MEG Shareholders to the overhang risk of significant selling from Waterous Energy Fund (“WEF”) and its limited partners which will put downward pressure on the share price, significant governance risks introduced by a controlling shareholder in WEF that may not act in the interests of minority shareholders, and inferior assets. For additional detail, please refer to the Directors’ Circular filed by the MEG Board on June 16, 2025 available at www.megenergy.com/offer-update and on SEDAR+ at www.sedarplus.ca. 

Recommendation of the MEG Board

The MEG Board, informed in part by the recommendation of the Special Committee, and after considering advice from its external financial and legal advisors, has unanimously:  

  1. determined that the Arrangement is in the best interests of MEG;  
  2. determined that the Arrangement is fair to the MEG Shareholders; 
  3. approved the Arrangement Agreement and the transactions contemplated thereby; and 
  4. resolved to recommend that the MEG Shareholders vote in favour of the Transaction at the Meeting (as defined below). 


All directors and executive officers of MEG have entered into voting support agreements pursuant to which they have agreed, among other things, to vote their MEG Shares in favour of and otherwise support the Transaction, subject to the provisions of such agreements.
 

Additional Transaction Details

MEG shareholders will vote on the Transaction at a special meeting (the “Meeting”) expected to be held in early October 2025. The Transaction requires approval by at least 662/3% of the votes cast at the Meeting by MEG Shareholders represented in person or by proxy. Details of the Transaction and the required shareholder vote will be included in an information circular (“Circular”) that MEG expects to mail to the MEG Shareholders and file on SEDAR+ (www.sedarplus.com) in mid-September 2025. All MEG Shareholders are urged to read the Circular once available as it will contain additional important information concerning the Transaction including the deadline for making elections to receive cash and/or Cenovus Shares. 

The Transaction is subject to a number of other conditions including certain required regulatory and government approvals, as further detailed in the Arrangement Agreement, a copy of which will be filed on SEDAR+ (www.sedarplus.ca). 

If you have already tendered your MEG Shares to the Unsolicited Strathcona Offer, you can withdraw your MEG Shares by contacting your broker or Sodali & Co., by toll free phone call in North America to 1-888-999-2785, or to 1-289-695-3075 for banks, brokers, and callers outside North America or by email at [email protected]. 

Contacts

INVESTORS

Sodali & Co

Toll free in North America at 1-888-999-2785, or at 1-289-695-3075 for banks, brokers, and callers outside North America or by email at [email protected].

MEDIA

Jim Campbell 
Vice President, Communications and External Relations 
T 403.775.1117 
E [email protected]

REJECT THE STRATHCONA OFFER

No premium. No upside. No reason to tender.

MEG Energy Urges Shareholders to Take NO ACTION

MEG Energy Corp. (TSX:MEG, “MEG”, or the “Company”) announced on June 16, 2025, that its Board of Directors (the “Board”) has determined that Strathcona Resources Ltd.’s (“Strathcona”) unsolicited bid to acquire all of the issued and outstanding MEG shares is inadequate, opportunistic, and NOT in the best interests of MEG or its shareholders.

On May 30, 2025, Strathcona made a formal offer to acquire all of the issued and outstanding MEG shares it does not already own for a combination of 0.62 of a Strathcona share and $4.10 in cash per MEG share (the “Offer”). The Offer remains open until September 15, 2025.

MEG’s Board formed a Special Committee to conduct a thorough evaluation of the Offer with the assistance of financial and legal advisors. Following this review and on the recommendation of the Special Committee, the Board has concluded that the consideration to be received by shareholders under the Offer is inadequate, from a financial point of view, to shareholders, is not in the best interests of the Company or its shareholders, and unanimously recommends that shareholders REJECT the Offer by taking no action and NOT TENDER their shares.

NO ACTION is required to reject the Offer.

If you have already tendered your shares to the Offer, you can withdraw your shares by contacting your broker or Sodali & Co, the information agent retained by MEG, by toll-free phone call in North America to 1-888-999-2785, or to 1-289-695-3075 for banks, brokers, and callers outside North America or by e-mail at [email protected].

Why Reject the Strathcona Offer?

The Board filed its Directors’ Circular on June 16, 2025, which provides information for shareholders about MEG’s prospects and the Board’s analysis, deliberations and recommendations. The Directors’ Circular is available below and on SEDAR+ at www.sedarplus.ca. Additional information can be found in the Investor Presentation, which is also available below.

In its Directors’ Circular, the Board details the reasons for its recommendations, including:

  • The Offer’s share consideration exposes shareholders to a company with inferior assets. MEG’s asset portfolio is located in the heart of the Athabasca oil sands region, anchored by Christina Lake, a best-in-class SAGD project with top quartile asset characteristics and approximately five billion barrels of discovered bitumen initially-in-place (“DBIIP”) supporting decades of low-risk, attractive growth. Together with undeveloped resource at Surmont, May River and Kirby, MEG has approximately 11 billion barrels of DBIIP. By contrast, Strathcona’s assets are scattered, lack scale, and are located in less prolific areas with uncompetitive asset characteristics relative to MEG’s Christina Lake.
  • Selling by WEF and its investors to provide liquidity will put downward pressure on the share price. WEF’s concentrated 51% ownership position introduces substantial and prolonged overhang risk, making the combined company a vehicle for WEF and its LP investors to sell their material ownership over time. Strathcona does not have sufficient trading liquidity for WEF and its LP investors to sell their interest in the market. If Strathcona combines with MEG, WEF will have more liquidity to attempt to sell its $6 billion stake. This selling pressure, or even the perceived risk of such selling pressure, will place immediate and significant downward burden on the share price of the combined company for a prolonged period of time.
  • The Offer is inadequate. The Offer lacks a real premium. Its advertised premium was opportunistically calculated as the best and highest implied premium based on Strathcona’s relatively thin trading. Since the announcement of the Offer, MEG shares have consistently traded above the implied value of the Offer, indicating that the market believes it significantly undervalues MEG’s shares. In reality, the Offer of 0.62 of a Strathcona share and $4.10 in cash per MEG share does not represent a premium, but a significant discount when measured over periods other than the single day on which Strathcona calculated the advertised premium.
  • Other paths to superior value maximization. MEG is a uniquely attractive investment opportunity: a pure play oil sands producer with best-in-class assets, an innovative team, and attractive growth opportunities. MEG warrants a premium valuation, which the Offer fails to deliver. MEG’s Board has authorized the Company to initiate a strategic review of alternatives with the potential to surface an offer superior to the Company’s compelling standalone plan.

As noted in the Directors’ Circular, the Board also considered the following:

  • MEG’s standalone plan offers low-risk, visible brownfield growth and free cash flow generation;
  • MEG has delivered outsized returns since its rejection of the previous unsolicited offer in 2018;
  • Shareholders have publicly expressed concerns about the value of the Offer; and
  • All research analysts covering MEG have price targets exceeding the value of the Offer.

Incident Notification

Incident notification – April 30, 2016 – Meg Energy announces that today, at approximately 08:15 hrs, during work carried out on a natural gas well near the village of Edmonton in Alberta.